Dow futures rallied overnight on the Greek Elections. At one point trading up to the May highs at 12,800.
On May 9th 10th and 11th, Dow futures printed 12,800 and failed all three times. Subsequently, we broke down to 11,886, Call that a 900 point break to our low on June 4th.
Now we have rallied back 62% of that break down. with the trade at 12,706. That was a key Fibonacci retracement.
Last night we got the final bullish news that the Greeks voted to stay in the EU with their elections. We got a 100 point spike, and low and behold, we are 150pts off those highs. A “buy the rumor-sell the fact”.
We saw the market rally back 900 point in 3 weeks in anticipation of this vote. That’s whey they call it a “Futures” market. The market discounts information and accounts for it with its action. Now that the news is out, folks are taking profits…
I think we could continue to trade this 900 to 1200 point trading range all Summer long. When you see the folks on CNBC with tears in their eyes and a quiver in their voice, its probably safe to get long. Buy a call and go back to the beach.
Its harder to tell when we are over bought, since by nature, the analysts are bulls. Most people are optimistic and bullish on America. Despite what the politicians pander towards with their rhetoric.
Our goal is to take advantage of trends when we see em. I tend to look for places to put counter trend trades in, because generally the snap back can be profitable over a matter of days or weeks.
This is a strategy I have held for over 20 years. It doesn’t work all of the time. No One strategy does.
But over time, its been a good, profitable strategy.
CER